A Christchurch couple taking their house insurer to court over earthquake damage have reduced their claim by more than $230,000.
Matt and Valerie O'Loughlin's damaged home is in the suburb of Dallington and in the red zone. The retired couple are fighting a settlement offer from Tower Insurance of $337,000 for a repair only, saying their policy entitles them to full replacement.
It is the first civil case against an insurance company over earthquake repair bills and has implications for anyone in the red zone offered a payout from their insurance company based on what it would cost to repair their home rather than to rebuild or replace it.
The O'Loughlins originally sought $1.3 million, including damages, which they have scaled down on three occasions outside court already.
On Tuesday their lawyer, Grant Shand, told the Christchurch High Court they had received revised rebuild costs overnight from a quantity surveyor who said it could be done for $662, 975.
Under cross-examination, Mrs O'Loughlin agreed that the couple stood to receive a combined total of more than $450,000 in payments from the Earthquake Commission, the Canterbury Earthquake Recovery Authority and Tower Insurance.
Mrs O'Loughlin told the court she expected to get a full replacement of her house from Tower after the home was severely damaged in the magnitude 7.1 earthquake in September 2010.
She said the house moved off its foundations, was surrounded by 40 centimetres of silt from liquefaction and lost all amenities.
In tears, she described to the court protracted negotiations with Tower Insurance, which resulted in its refusal to insure the property for the six months following the September quake.
Following the devastating 6.3-magnitude quake in February 2011, the Christchurch City Council deemed the house unliveable after a huge sink hole was discovered underneath the living room floor.
Mrs O'Loughlin told the court it has been very upsetting to hear of neighbours with less damaged houses being paid out for full replacement costs by other insurers. She said she and her husband became highly stressed and sick, and had a daily struggle "to get anything out of Tower".
"The hours I spent composing and sending emails to them is huge. It seemed to me every day I had to fight a battle. I knew all along that our house was beyond repair and told them so many times. Each time I got a scope of works, I went over it and found mistakes."
Couple over-stated claim, court told
The court was told that Matt and Valerie O'Loughlin over-stated a repair claim to Tower Insurance.
The couple made claims to the Earthquake Commission after the large quakes in September 2010 and February and June 2011.
Mrs O'Loughlin told Alan Galbraith QC, the lawyer acting for Tower, they got an indicative quote to rebuild their house for between $1900 and $2000 per square metre.
In an email to Tower Insurance, the couple requested $2400 per square metre. Asked why, Mrs O'Loughlin replied: "We all have dreams."
On Monday, Tower Insurance told the court the couple have made their situation worse by taking the company to court instead of accepting the payout it offered them in 2012.
Mr Galbraith said the O'Loughlins have realised they would struggle to purchase a replacement property with their payout, based on the current high cost of land, and are asking Tower to make up the difference.